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What is Portfolio Protection?

How does Portfolio Protection work?

What do I need to do to make sure Portfolio Protection is working?

What will Portfolio Protection actually do to protect my investment?

Are all my investments covered by Portfolio Protection?

What’s an example of Portfolio Protection?

What happens when Portfolio Protection activates?

Does Portfolio Protection limit gains in my portfolio?

So Portfolio Protection is basically hedging, right?

Can you give me an example of how Portfolio Protection would work in real life?


What is Portfolio Protection?

Portfolio Protection is a way to protect your investments using a practice known as hedging. It's simple — Portfolio Protection helps to prevent loss, enhance growth, and keeps your portfolio strong.

How does Portfolio Protection work?

Portfolio Protection uses AI-powered forecasting to identify market risks and to respond with hedging strategies. These risks include overall market movement like a recession or inflation as well as changes in interest rates, market volatility, and oil prices.

The AI predicts these changes, and automatically adjusts your portfolio accordingly.

Since Portfolio Protection is automatically included in most Investment Kits, all you have to do is make sure it's turned on.

What do I need to do to make sure Portfolio Protection is working?

Portfolio protection is universally applied to all Foundation Investment Kits. All you need to do is turn it on, and the AI does the rest.

What will Portfolio Protection actually do to protect my investment?

If the AI predicts change in a particular risk factor, Portfolio Protection automatically hedges your portfolio in anticipation of the risk. It does so by shifting some assets to cash or hedging assets that will appreciate in value if a specific risk increases.

downside protection activated

The shield icon with "Protection Activated" indicates that Portfolio Protection is activated.

When you tap into "Protection Activated," you'll gain insight into how Portfolio Protection works.

Are all my investments covered by Portfolio Protection?

No. Only Foundation Kits are equipped with Portfolio Protection.

Since other Kits are designed for short-term gains or trends, Portfolio Protection is not a viable strategy. However, all kits are designed to minimize losses, regardless.

What’s an example of Portfolio Protection?

If the AI predicts a downward shift in the market, we may increase your portfolio’s cash positioning to allow for stabilization. If the downward shift is predicted to be more extreme, we may add a mix of hedging assets designed to increase in value when a specific risk factor increases.

What happens when Portfolio Protection activates?

Simply put, for each risk factor, Portfolio Protection adds hedging assets to counter the potentially negative impact of unexpected changes. This prevents these changes from harming the performance of the Signature Investment Kits you’re invested in.

Does Portfolio Protection limit gains in my portfolio?

Potentially, yes.

Because we employ active hedging measures, this means the risk of your portfolio decreases in relation to specific factors. This may also mean that, on some occasions, your portfolio does not grow at the market rate.

However, Portfolio Protection guards your investment, meaning that, all things considered, a portfolio with Portfolio Protection activated will be in a superior position to a non-protected portfolio if predicted risks do arise.

So Portfolio Protection is basically hedging, right?

Hedging is a financial strategy that limits the risk to financial assets. So, yes, Portfolio Protection is a form of hedging. However, Portfolio Protection differs from competitors’ offerings in several meaningful ways.

First, our AI predicts market shifts and responds accordingly. The AI’s risk monitoring is an ongoing process with updated short-term forecasts and adjustments.

Portfolio Protection takes a detailed risk assessment that involves not only broad market risk but also interest rate risk, general volatility and oil price risk, all signaled by the multiple neural networks of our AI. The risk assessment also weighs the historical sensitivity of each Kit’s holdings to each of the risk factors.

You can think of Portfolio Protection as AI-powered hedging on steroids.

Can you give me an example of how Portfolio Protection would work in real life?

Sure! Let's consider two hypothetical Kits, both with hedging.

Kit A’s assets decrease if oil prices rise, while Kit B benefits from higher oil prices.

If Q.ai’s neural networks predict that the price of oil will increase for the upcoming week, Portfolio Protection will automatically add a hedge to Kit A and not adjust Kit B.

There is no oil risk hedge added to Kit B because the Kit is expected to benefit from this specific risk factor increasing.

The hedge added to Kit A would be the addition of oil (represented by a crude oil ETF) to the Kit. So, if the predictions were right (both in the direction of oil's price and the correlation between Kit A and oil), we would see the hedged Kit outperform one without Portfolio Protection.

Let’s do the math:

  • Kit A unhedged: 100% in equities

  • Kit A hedged: 90% in equities + 10% in oil

If the return for equities is -1% and oil increases 15% then the returns are

  • Return of Kit A unhedged: 100% * -1% = -1.0%

Return of Kit A hedged: (90% * -1%) + (10% * 15%) = -0.9% + 1.5% = +0.6%

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